GOLDMAN: There's a 60% chance that the economic recovery goes on for another 4 years

Six years into the recovery, it's turning out to be one of the
longest ever. Since starting in July 2009, the recovery has
lasted for 76 months, nearly twice as long as the average age of
expansions since 1854, according to the National Bureau of
Economic Research that dates business cycles.

This is raising questions about how much longer the expansion
can run, among other symptoms of a possible recession that
we recently outlined.

But looking more closely at the data, Pandl finds that the
probability that this expansion lasts another few years is about
60%.

First, a look at the ages of expansions in developed countries
via the chart below shows that the average age has increased over
time.

Goldman

Pandl writes that based on these historical cycles, it's
possible to calculate the probability that an expansion will go
on given a certain starting point.

Pandl writes,

"When an expansion is just starting out, the odds that it
will last more than six years — i.e. beyond the life the current
US expansion — are only about 45%, based on data since 1950.
However, the "mortality rate" of business cycles is fairly steady
from one year to the next, with only a slight tendency to
increase over time. Therefore, conditional on an
expansion reaching six years of age, the odds that it can
continue are still reasonably good. Again using data since 1950,
we calculate that the unconditional odds that a six-year-old
expansion will avoid recession for another four years—and mature
into a 10-year-old expansion—are about 60%.

Pandl notes that these conclusions don't factor in unexpected
conditions that could develop over the next few years, just
like people in countries with the highest life expectancy still
die of terminal diseases.